tv Real Money With Ali Velshi Al Jazeera January 19, 2014 2:30pm-3:01pm EST
♪ ♪ americans worried about jobs and paychecks have been keeping their wallets in their pockets, i well tell you what that could mean for the economic recovery. ford talks about the challenges that the automaker faces and thousand the big easy is trying to gill hollywood a run for its money, i am ali velshi and this is "real money." ♪ ♪ this is "real money," you are the most important part of the show so pleas your our live conversation for the next half hour on twitter at ajrealmoney or. at ali velshi or aj/realmoney.
i told you about conflicting signals in our economy my, today i will give you more to chew on, every month thompson reuters teams up. their latest results show sentiment taking a dip in january and driving that dip are middle and lower income families concerned about jobs and pay. today we got new figures showing more job openings in november than at any time since 2008. despite signs of a growing economy, many question whether the economy is growing enough or fast enough to raise income levels for average american says in 2014. we saw examples of that during the holiday season in 2013. sales were up from 2012 but weren't very profitable because retailers discounted so deeply to attract customers. sales were strong enough, but stores made less money on those sales. on friday we learned that u.p.s. made less money because i've slew of failed christmas packages deliveries cuting in to its bottom line. all those shoppers holding out
for steep discounts and last deals over the holiday season may have proved too do of thely to americas businesses in the end. we development know what yet is driving the caw his behavior. if america senses storm clouds on the horizon they pull back on spending. development get too alarmed yet just think about it as an economic storm cloud forming over the ocean far away from where we are. we are not sure if the clouds will make landfall. my nobody is to watch those clouds and warn you if they represent danger to you. could be nothing. that's what economist williams evans at the st. louis federal reserve teams to think. >> step back in do consumer sentiment serve to his reminds us that it's not a straight lineup. there are going to be fits and starts, we are going to have periods of stronger spending, stronger growth, followed by some periods of pulling back a little bit. and i suspect that's what we'll
see as we get further never to the year. >> well, as for the housing market slowing mortgage activity showed enough quarterly earnings by the banks last week. several banks reveal that the boom in financing in 2013 fell off the cliff in the final three months of the year. america's two biggest home lenders are seeing huge drops in mortgages which include both refinanced loans and actual home purchases. wells fargo the largest home lender in america reported a 60% drop compared to the previous year, while the number two lender, jp morgan chase, report aid 54% drop for the same period. could be rising raeurbgts we rat know yet. but could being glimmers of hope for a significant member of home buyers, even though interest rates are inching up it may get questions easier for people to lock in a loan going forward. we have seen lenders begin to relax loan standards not much, just a little bit. the national average fico score or credit score used lie lenders
to assess a home buyer's ability to payback a loan inched lower in 2013n december the average score dropped to 727 according to elie may. that's down 21 points from the previous' years average score. all should have big implications for consumer learned who better to discuss that shan sheila beao is now the chair of systemic risk counsel. i asked her whether looser lending standards are really a good thing. >> well, i don't know if it should just be all about credit scores, we should be looking at the ability to pay. should look at do you have a good credit history. this may be reflected by the credit score and othe other facs do you have enough money, do you have a down payment i think that's important. the a variety of underwriting factors that banks have looked at and did so quite successfully before the advents of the
private security market. >> so my viewers understood it's a commodity. we know you are a good risk, doesn't matter they'll give you a loan and sale it off to somebody else. >> yeah. well, there are still a lot of small banks that do portfolio lending but do a lot with fannie mae and freddy back. it's called the private label security market organizations that doesn't exist now it exploded during the crisis and hasn't come back yet, which may be a good thing. so, yeah, i think some balanced lending standards is good. but we certainly don't want to get back to where we were prior to the crisis. we had too much mortgage lending prior to the comprise us it was an unstainable engine of consumption, people doing serial cash-out re-identifies witoutoo. ballad preach is good. long-term rates are going up.
may give banks inning sen testify. we have talked about it before. they can make a more of a spread now on the loans, a little bit more of a return that mae may give them innin incentive to hi, doing purchase originations most of the activity has been refinancings and that, you know, puts a little extra money in homeowners' pockets, the ones who can qualify. but it doesn't really heal the housing market that much. you need people actually buying houses. the refinances activity declining might give banks more incentive to do purchase originations which will really help the housing market but they need do in a balanced, well underwritten way. >> a critical part of the mortgage market is the government it he feel s its role increased dramatically there 2008 after spending more than $170 billion to take over fannie mae and freddy mac which don't issue loans but buy them from banks and that allows the banks to make more loans. the mortgages that they buy are held as investments or secure
ties bundled and sold off to investors. they were create today help increase homeownership amongst the middle class. you think now that they have paid back and are so big in the system, you think that maybe it's time to say goodbye to these two organizations? >> i do. this is a huge risk for taxpayers, as long as the housing market continues to improve, we are okay. but taxpayers are guaranteeing over 90% of mortgage originations in this country. it's a huge exposure if we should have another downturn those mortgages should start becoming troubled. i would like to seat private sector starting to take responsibility for funding and taking the risk of mortgage finance. and doing it in a responsible way. you know, we subsidize housing a lot. in my view, housing is a manifestation of a healthy economy. it can't drive economic health and growth. we need to produce things that other people want to buy. we need jobs, real wage increases, that's what gives us a healthy economy and the housing market will improve if
we have those things, to think the housing market can drive it through, again, the availability of cheat credit and housing bubbles is not sustainable. i one we subsidize housing too much to the dead tk*et ram to othedetriment of oureconomy. >> a lot of other countries don't offer credit. canada has the similar same homeownership rates. >> without the subsidies, that's exactly right. it's not clear if it helps. it may make housing more expensive, but it's not clear that it expand homeownership that meaningfully. that's correct. >> let me ask you, the topic of great interest is homes, with yobut weneed businesses which ts and end up having sometimes risk year loans to get financing. how do you feel about the market for businesses trying to raise money? >> right, well, commercial loans seem to be picking up a little bit. you are right. that's the kind of lending we want to see. that's what is going to drive economic growth and job creation. so that seems to be picking up
again. you want bre prudent commercial lending. we saw some abuses in commercial lending prior to the crisis. so we need to make sure that banks use prudent, good, solid underwriting standards but that's picking up a bit. and, again, i think with interest rates going up, the net interest margins will improve for banks in making loans. which means they will have more incentive to do it. it may sound counterintuitive but but get lending with higher interest rates. >> that's interesting. great to talk to you. >> thanks for having me. >> next, ford ceo on the challenges of the road ahead. also the fight for the toughest truck on the block. and the state that stands to reap the benefits. and later taking hollywood out of california. more states are trying to lure in the movie business, we'll talk to a local company in louisiana that's ring the benefits, that story and more as "real money" continues. keep it right here. aljazeera america presents gripping films from the worlds top documetary directors.
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in 2006. its worse loss effort. he shut plants and cut jobs, now ford is back on track. i was at the ford auto show last week where mulally i was deuced the new did sign its massively successful f-15150 pickup truck. here is what he said. >> it has been the most successful trick since 1932. what we announced nod toed is our latest new f-150 and the developments associated with lightweight materials and turbo charging and fuel agains and and all the improvement in mileage, lower co2. the cargo capability and the features that they do feature. it was a great day for ford and the truck. >> outside of ford, 201 2013 waa real badger year for the u.s. auto industry. a lot of people didn't think we could get to those numbers. more than 15 million cars sold. >> yep. >> was that better than -- i mean, obviously you had forecasted all along, but what does that say true about our
icon me here? >> i think it has a lot of very positive things to say. it was about where we thought it would be, you know, less than 16. and we think based on the strength of the economic recovery we'll see an economic expansion of gdp around maybe 2 1/2% for this next year. and industry between 16 and 17 million units in the united states. >> what did you do last week at ces when one of your guys said they are collecting information on drivers. cars have black boxes like airplanes do. this is a business you know about. >> right. >> kind of made people a little worried in light of the nsa stuff. is ford collecting data on us? >> absolutely not. we do not track where you are and where the vehicle s that was just mistakenly said it's not right. it's kind of part of a bigger conversation about the importance of privacy. and we absolutely, our number one priority is to focus on the privacy of our consumers. and to help them with their driving experience, we do not keep track of data.
>> earlier today you were having a conversation with some bloggers. >> yes. >> and i thought there was one interesting question there where people said what are you doing? you mentioned you are attracting whole families. younger americans, we have discuss third degree for a few years, are just not that in to driving a car or getting a car the way i was or you were. with us it was a right of passage, came of age to drive, you got a driver's license and got a car. maybe you got the car before your license. they don't think the same way. what do you do about that huh at fort in. >> the first thing is we understand what they really value. what has turned out to be the biggest single thing they value is connectivity. and they especially connected with their smart phones and smart devices so we are not building any of that capability in to the car. we allow that to be brought in. but we access that with our app link with our sync so you can run your 5*67 application on his your smart phone but do it with your voice owe your hands are on the wheel and eyes on the clearly. clearly people live in cities
and the mobility is important. we were working with all the governments and all the cities how to we keepy involved in the rapid transit and mass transit to allow people to move around there will always be a market for automobiles and we are interested in modes of transportation and linking those so people can have really enriched lives in the big he cities. >> where are you developing outside of america? you have factories being built? >> absolutely. we continue to broaden our portfolio of not only vehicles but the balance of the markets. so we are serve all the the markets in north and south america, europe, russia, africa. our fastest growing markets are in asia pacific and china. and we are also implementing henry ford's original vision of having our design and operations in all of the major countries. >> right. >> so we can be part of the economy and provide greater jobs and great careers. every vehicle we sell anywhere around the world helps ford provide the most affordable cars and vehicles everywhere around the world. we have new plants in china this year, a new transmission chant
iplantin chong ching and inning cruising our products in all of our manufacturing facilities. and we'll be hiring 11,000 new employees around the world. and 5,000 here in the united states throughout the united states. >> one of the things henry ford contributed to in the united states, was the building of the middle class. he understood that if you build the middle class they'll by your cars. >> yes. >> we are now seeing a real -- a lot of pressure that middle class and it's so tied to the auto industry. manufacturing has been decreasing in america for decades. but the auto industry was the thing that represented an avenue in to the middle class. can it still play that role? and what role is it playing? >> you know, ali, i really think that it will continue, because there has been no country sustainable without a really strong manufacturing base. and i am so pleased to see the attention that we are all putting now on having not only a good manufacturing base but a competitive manufacturing base worldwide. as you have reported well a few years ago we were not
competitive. and all our june ao*upb yours, , suppliers, dealers that we pulled together we have created a very compelled tiff ford motor company, growing the business worldwide and exporting around the world and i think that foundation almost 70% of the research and development in the united states is associated with the manufacture, it's important that we keep nurturing the manufacturing base and make things that people value and want it's a foundation for our economy. >> ford's new f-150 will be built in missouri in 2015. i spoke with the missouri governor and his role in the auto industry. >> thank you for being with us. >> thank you. >> unlike those of you for missouri i have no need to ever have a truck and this new f-150 has more stuff than i need. this is actually a working man's truck. it has all sorts of things and a connection to your state. other than the fact that people will buy? >> we make them in the show-me
state. we are proud proud of new redesign of the 50-150. we think it will continue to keep the top market for ford, continue to make sure that this heavy-duty vehicle delivers for america. >> you know, everybody associates autos and auto building with detroit. but, in fact, it's all over the state and it's been in your state. >> especially important in these heavier vehicles. missouri has on the western side we have ford that builds the new fan and this f-150. on the eastern see chevy colorado and the canyon. if you are driving a pickup truck there is a good chance it was built in the show-me state. >> when you been this show and all of the stuff that's happening in the last seven years since the recession and in ford's case even longer than that because it suffered starting from 2000. there is a real sense that it was worth it keeping this industry going. because it's now very meaningful. >> my first he ca executive ords the jobs task force in the second year it was a lot quieter place than today. we made a bet that manufacturing would occur with the center
piece being the auto industry and that's paying off. >> your state has the same concerns that the country has in that you have to keep that middle class strong so that they can pay taxes so that we have more people paying in than taking out of the system. where do you see us right now at this point in our economy? >> first of all it's good to see 51 straight months in which the unemployment rate in missouri has been we although the national averages, nice to see december jobs for us adding 15,000 jobs in just that one month. a lot is in advanced manufacturing and science technology i think really shift to go a world economy making sure that you have an education system and a training system that can deliver to students and people that are getting retrained competitive skills it's really important. the best economic development tool there is, education. >> forget about who got snubbed? the oscar nominations, at least for now. coming up i'll tell you how states like louisiana are trying to take hollywood out of california and why some critics are giving them the thumbs down. that story and more as "real money" continues. keep it here.
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generated $504 billion. or 3.2% of gross domestic product. gdp. given those numbers, it's no wonder that some states are competing hard for lure tv and film production from hollywood. one way of doing that is to offer tax cred and it's other financial incentives. it's a controversial practice that crit i critics say gives y away to production companies that don't create permanent job. missouri let their contract expire, north carolina where the hung irrelevant games is shot is debating whether do eliminate credits next year. but louisiana is fighting hard and gives a 30% tax credit for all production expenditure in the state. a spoke with a business owner capitalizing on that. the owner of an entertainment transportation company, hollywood trucks, it was named one of north america's fastest treeing companies by inc. magazine, providing services to shoots including butler, 12 years a slave and the dallas
buyers club. a asked andré how important the tax credits are for business. the tax credits are absolutely important to not only the creation of many companies and economic development, but to the state as a whole. it's a brand-new industry for us. so i think it's something that is really fantastic. it's been growing. we are excited about it. it's right behind me as we can see, we are actually on a production set right now, as well as standing at a film studio. five years ago, none of these things were here. >> okay, so it's obvious to you why it works, but a lot of, particularly in tough times, people say we provide these tax credits, it reduces revenue to the state from a tax perspective, with the argument that people get jobs, the productions spend money in the state and missouri and north carolina are saying, maybe they don't. maybe they come in here, companies like yours get the benefit of the tax credit. what is the commune -- what does the community keep? particularly when you are talk about another state. give me the argument against
that. >> well, for instance our company was born through a tax credit program. hollywood trucks was fountained in louisiana, started with seven vehicles, we have grown now to above 300, close to 400. we are expanding daily. it's an infrastructure program. so what happens is you create long-term jobs. every time we purchase our buy a new truck in this state, every single union driver that drives those trucks is now a long-term employment. i would say that those credit programs are not only important to long-term jobs, but also sustain long-term jobs. if someone says that programs like this do not create long-term jobs, generally what happens is, any time you go in to any form of business scenario or any form of economic development incentive program, you have to have a certain period of return on investment. >> right. >> so that stands for any form of business. the long -- what happens with these particular programs and
the film industry, entertainment industry, whatever you want to call it, the longer you keep these programs in place, the greater the return on investment. >> because people make permanent investments? >> right. right. you get homes being built, families moving here. short-term job becomes long-term taxpayer that person working on one film is a becomes a resident of the state, buy cars, spending money on gas, putting their kids in school, friends and family are moving down. it is a long-term industry but you have to give that particular credit program a certain amount of time to get your roi and what i have find or what we have seen is that the longer the program is in place, the greater the return on investment. >> business has been growing in a company called tractor supply, it's so good, that the country's largest retail farm and ranch chain will be add today s. and p index, which includes 500
of the largest publicly traded companies in the united states. it replace life technologies on january 23rd when the stock market closes. this is as much for my executive producer as it is for you because he wants a reminder about the world economic forum and why it matters to you or maybe he wants to know why he's paying for me to fly i to a gathering of word's business and political leaders at an exclusive skiing village in switzerland it's hard to get to, expensive to attends and not open to the public but a lot of good gets done there. companies discuss the future. leaders discuss the world's most inning track table problems and nongovernmental organizations knowing that they have the attention of the world's di decision makers and the media try to advance their causes. this year much of the conference's attention will be turned toward growing income and equality across the world, including here in the united states. i'll speak to the ceo of coke about youth unemployment. to the head of the international monetary funds about the global
economy to the ceo of cisco about how he sees the next stage of internet being about inanimate objects like bridges that warn they are about to fail. inventory that tell us merchants when they need to be replenish. it's world economic forum is about big ideas and i am going there because i think you deserve as much access to those ideas as no who have the time and money and the influence to attends. so i will be your eyes and ears to let you know about the big themes being discussed by global, political, and business leaders so that you can prosper from those ideas too. i am there to work i won't even hit the slopes not even once but that's not much of a challenge because i am a terrible skier. that's our show for today. i am ali velshi. thanks for joining us, ♪ ♪
♪ this is al jazeera america live from new york, i'm jonathan with the headlines, violence is intensifying against the government and tens of thousands are aiming at stamping out the protest and they kidnapped a policeman and injured 20 others. tomorrow iran will be with the long awaited agreement and they are in tehran ahead of the deadline and last for six months as a final deal is negotiated. the reelection of a mayor on the island of okinawa and he won a